The Occupation of Iraq: Winning the War, Losing the Peace

Introduction

JOANNE MYERS: Good morning. I'm Joanne Myers,
Director of Public Affairs Programs, and on behalf of the Carnegie Council I'd
like to thank you all for joining us this morning.

It is a great honor to
have with us Ali Allawi, the former Minister of Finance, Defense, and Trade of
Iraq. I hope you all have a copy of his bio and that you have taken a moment to
read it. The subject of the discussion this morning is his book, The Occupation of Iraq: Winning the War, Losing the
Peace.

Hubris, as defined by the ancient Greeks, denoted
arrogance as well as pride and was often associated with a lack of humility.
When combined with an absence of knowledge, interest in, or exploration of the
past, you have the ingredients for what virtually everyone now agrees was a
recipe which drove United States' efforts to implant democracy in Iraq without
any understanding of the country, its people, or its history.

Ours has
been a costly mistake. With the invasion and subsequent occupation of Iraq, the
Bush
Administration made a huge foreign policy investment. It has been four years now
since the fall of Saddam Hussein and the price paid for this debacle has been
enormous. It has been a constant sacrifice that is deeply felt by American
troops and Iraqi people each and every passing day.

While many books have
been written about this tragedy, the story as told by our guest this morning
offers a unique insider's perspective about the aspirations of Iraq's political
parties, interest groups, and global forces that have now converged to create a
situation which is tearing Iraq apart and will haunt us all for decades to
come.

Although U.S. pundits, scholars, journalists, and policymakers have
offered countless analyses to explain the sectarian violence, until now no
authoritative Iraqi perspective on the war has been part of the discussion. Ali
Allawi's account is sobering. With uncommon clarity, he reveals how often the
Iraqis were ignored in the chaotic rebuilding of their country and explains the
complex dynamics behind Iraq's descent into violent sectarianism, as only
someone who has himself an essential understanding and familiarity of all the
players in the region can.

As one of Iraq's most respected Shia
politicians of the post-Saddam era and as one of the principal participants in
the unfolding post-liberation saga, he was able to witness events firsthand. As
a result, his study of the crisis in Iraq is one of the most perceptive analyses
that I have recently read about the extent of the disaster and how it might best
be resolved.

While the liberation of Iraq may have been noble, the
aftermath has proven dangerous and complex. The unintended consequences have
reverberated well beyond the country's borders. History, as we know, cannot be
written in advance. We can only hope that the situation, as bleak as
discouraging as it now appears, is not in fact hopeless.

Please join me
in welcoming our very distinguished guest—we are so delighted to have him here
with us this morning—Ali Allawi.

Remarks

ALI ALLAWI: Thank you very much for this kind
introduction. Good morning, ladies and gentlemen.

Breakfast meetings are
quite unknown in the Arab world because usually we start ticking at around
midday, so excuse me if I am not completely with it.

The book that I
wrote was not a result of a conscious attempt to write a book when I first went
to Baghdad. When I first went to Baghdad, the intention was to serve and to try
to create a new political structure, a new political order, in the country, one
in which the legacy of the past, the terrible legacy of Iraq's modern history,
and some of the unresolved conflicts of the Islamic and Arab world we hoped were
going to be recast in this new order. Unfortunately, this was to some extent an
incomplete, if not a naïve, perspective of the depth of the crisis that emerged
in Iraq as a result of the invasion and occupation.

I did keep a diary,
and the diary was the key resource that I used in the process of trying to put
down my thoughts through the various tumultuous events that we experienced in
the first few weeks, months, and then years. And it was really one of the most
important documents as far as I was concerned. It allowed me to look back in
retrospect and to look at the ebbs and flows, the peaks and valleys, of this
unusual, if not extraordinary, event in modern history. Without being
presumptuous, I knew that I was participating in the making of history, not only
the history of Iraq but also the history of the Middle East.

The
overthrow of the Baathist regime, the invasion and occupation, in my mind is
one of the most cataclysmic events in modern Arab history, maybe equivalent in
terms of its effects and scope to the formation of the state of Israel and before that the
fall of the Ottoman Empire. It did not appear that way, but if you add up
all the issues, if you add up all the extraordinary events, you would see that
what happened was not only an invasion and occupation; it was in fact an
upending of a deep power structure that had been in place in Iraq for a number
of years and had been one of the anchor stones of the post-World War I
nation-state system in the Middle East.

So not only was America's
expedition into Iraq one that had extraordinary implications in terms of
international relations and international affairs, because I don't think one can
look back in the last fifty-odd years after World War II and see such an
extraordinary event—I mean Suez
really pales in significance to what happened here. Suez was a few weeks' affair
and the Anglo-French/Israeli invasion was quickly sent
packing.

Similarly, Vietnam, which was another expedition that the United States
undertook, was really in support, if one looks at it legalistically, of a
sovereign or semi-sovereign government. So it really does not bear
comparison.

Neither do I think the expedition to countries like Grenada and various other South American countries in the
postwar era compare to this, because not only was this much larger in scale and
scope and involved far more resources, far more ambitions, but it was designed
in parenthesis to make over the Middle East in a way that would appear to
engender international stability and secure America's own interests.

This catalog, as it were, and the Iraqi opposition—and I talk about the
opposition because they are the main interlocutors, or they were the main
interlocutors, with the United States in this project from the Iraqi point of
view, and they are the ones who were catapulted to unexpected power as a result
of the invasion. If one is to be fair, it would have been improbable, if not
impossible, for this collection of various groups that were in exile in the
1990s to aspire to power under their own steam. Certain parts of the Iraq
opposition firmament, like the Kurds, obviously had deep roots inside the
country, but the rest, either singly or collectively, would not have been able
to overthrow the dictatorship.

The consequences of the U.S. invasion, I
think, because of the powerful impact it had locally, domestically inside Iraq
and regionally, is very much akin to revolutionary effects. It is no less
different, I think, than what happened in terms of the French
revolution, or even the Iranian
revolution, in terms of the consequences internally and
regionally.

What are the consequences of this war that we are facing now,
that we are trying now to come to terms with? Each country in the region in its
own particular way, looking at its own national security, looking at its own
interests, sees in Iraq either a boon for its own domestic stability and power
or a threat, and the degree of threat varies from tangential to mortal. I say
that really without much reservation.

In certain countries, the changes
in Iraq do generate a sense of existential threat. An example here is that if
the Kurdish drive to a great degree of autonomy in Iraq leads to some kind of
confederal arrangement, if this is not contained in a way that Turkey finds
acceptable or tolerable, then it will be seen as a mortal threat to it.

If the Shia ascendancy in Iraq leads to empowerment of a sectarian
elite, empowerment of a sectarian group, and increases the religious or
theocratic power of the clerical groups and a determinedly Shia perspective,
that is going to affect Saudi Arabia undoubtedly, and it is going to affect the
whole string of countries up and down the Gulf, wherever there are Shia
minorities or majorities, as the case is in Bahrain, or pluralities, as they are
in Lebanon.

What happens in Iraq is also going to affect vitally the
interests of countries such as Jordan. Now, one asks, "What has Jordan got to do
with Iraq?" Well, Jordan's economy in the 1980s and 1990s was very much
dependent on its trade with Iraq. The investment flows and the economies and the
business groups involved in sanction busting, involved in cross-border trade and
so on, were an important element of the Jordanian economy. If Iraq changes its
trade patterns, its economic patterns, in, let's say, a northwest/southeast
axis, more towards Turkey, Iran, and the Gulf countries and on to the
subcontinent, that is going to affect vitally the economic well-being of Jordan,
not to mention the burgeoning refugee crisis that is now camouflaged as two
million Iraqis on tourist visas in Syria and in Jordan.

So the issues
that arise out of the invasion of Iraq are not the ones that were narrowly
determined by the U.S. administration when it decided to go to war. The war, we
all know, was given its justification in terms of weapons of mass destruction
and, again in parenthesis, the issue of the war on terror. But in reality the
war also had other proponents. Other groups saw in it the opportunity to remake
or refashion Iraq as a kind of liberal, secular, modernizing society that could
be an anchor stone of an overall civilizational makeover of the Middle East—a
rather foolish project if one looks seriously at it.

So all of these
factors I think created, without looking at the domestic Iraqi conditions,
revolutionary, or potentially revolutionary, or radical outcomes.

In
terms of Iraq itself, the consequences are even more incredible, and it is
incredible how little attention was paid to them. I am thinking now obviously of
the rise or the empowerment of the Shia and the relative disempowerment of the
Sunni Arab community.

Now, you say that the politics of Iraq were never
cast in sectarian terms. On the surface this is true, but this is part of the
problem also, because the surface calm that existed, that covered the deep
structures, what was called the "deep state," was determinedly sectarian from
the days in which the Iraqi state was established. But it was in the early days
and right through the 1950s and 1960s a certain kind of sectarianism in which
the Shia elite by and large acquiesced. But the bargain was that the Sunni Arab
minority who achieved the commanding heights of power in the country allowed
enough space for ambitious Shias to enter into that sphere. But they would
not—and that was, I think, very clear—tamper with the institutions and props of
Shia identity in Iraq. By that I mean the mercantile groups who were largely
Shia, the clerical establishment which was the heart of Shia Islam, and all the
cultural and educational institutions attached to it.

So throughout the
1930s, 1940s, and 1950s, the successors to the Sunni Arab Ottoman officer class,
which actually dominated Iraq after the 1920s, were clever enough or were
flexible enough to accommodate ambitious Shias, but it was understood that you
stay away from things like the military, you stay away from things like the
security forces, and that the state in its overall identity vis-à-vis other
countries was a determinedly Arab state with a kind of allegiance to orthodox
Islam or Sunni Islam. There were grumblings here and there, but it really did
not affect the overall balance and throughout the 1950s and the last days of the
monarchy, the situation began to ameliorate even further.

Of course, all
this was put paid when the Baath came to power in 1968, because in their foolish
drive to modernize—or apparently modernize—the country, they decided to destroy
the props of Shia identity and other people's identities in this centralizing
nationalist project that they had, and they declared war on various segments of
the population under this false category of modernizing and secularizing the
country.

So the first to go were the Shia Islamists. The Islamic movement
had begun to burgeon in Iraq in the 1950s, mainly as a response to the
increasing radicalization of youth into the communist movements and into the
nationalist movements, but mainly the communist movements. And they [the Baath]
began to attack business communities—large-scale expropriations, expulsions took
place—and they executed a number of Shia religious figures, culminating the
execution of one of the great intellectual figures of Shia Islam, Ayatollah Muhammad Baqir al-Sadr.

They also declared war on the
Kurds. Between 1974 and 1975, the Kurdish movement had launched a
near-successful insurrection in the north. But, again through international
machinations negotiated through the offices of Henry
Kissinger, the Iranian support for the Kurdish movement was withdrawn and
the whole thing collapsed, leading to large-scale expulsions and a refugee
crisis.

There was another twist when Saddam himself took over absolute
power in 1979 and that coincided with the mortal threat that he saw from the
Iranian revolution, which ended up in the Iran-Iraq
war. Again, the Iraqi body politic, or social politic, was grievously
disturbed by that. That was accompanied by large-scale expulsions of people on
the spurious grounds that they had Persian identity or they were somehow
undocumented and stateless. Something like half-a-million people were expelled
from Iraq, mainly to remove what was seen to be a potential fifth
column.

So the opposition abroad, which was really a smattering of
individuals, grew in the 1980s, and grew in a way that its ups and downs
coincided with the various movements on the battlefront. But it was foolish,
because the entire world was supporting Saddam, not least the United States and
the Western Alliance, including, we now know, the extent of financial support
given to him by the Gulf States, something like $40 or $50 million.

But
then there was another twist to it. In 1988 I remember we were voices in the
wilderness. When the Iran-Iraq war ended, nobody wanted to hear about the
so-called opposition. But we got a second wind after the invasion of Kuwait, and
we were then eagerly sought after by various people in the state departments and
the various chancelleries here and in Western Europe and wherever, to try to see
how they could use these political figures in the process of containing and
isolating the regime. This motley crew grew over time into some kind of formal
opposition which was poised to come into the country after the fall of the
regime.

So the political class that emerged to work alongside the United
States in my mind is equally culpable in the deterioration and the conditions in
the country after the invasion and occupation, and was really one that played a
large part in pushing its personal narrow agendas against a national vision for
the country.

Well, where do we stand now and where do you go from here? I
mean I don't want to rehash the mistakes done by the CPA [Coalition
Provisonal Authority] and the whole litany of inexplicable, incoherent,
and inappropriate programs and politics. This has been covered, I think, quite a
lot, and a lot of it is in the book here. Neither do I want to talk about the
military flaws, the inability and unwillingness to acknowledge the existence of
an insurgency, and the unwillingness to tackle it as its early
stage.

Inside Iraq what happened was that the empowerment of the Shia was
a necessary, as it were, concomitant to the invasion and led to an equally
powerful effect, which is the rejection of that empowerment by a significant
portion of the population.

It also cemented the drift of the Kurds away
from the state of Iraq. The Kurds were never loyal, frankly, to the state of
Iraq. They were loyal to their own territory, which happened to be inside
Iraq.

The Shias used to be loyal to both the country and the state, but
after the 1991 uprising and the terrible repression used to put it
down—something like 300,000 people were killed in 1991—I think the Shias
themselves became alienated from the traditional Iraqi state, although they kept
their loyalty to the country.

So the Kurds' drive toward some form of
autonomy may be leading to confederal arrangements inside Iraq, may be leading
subsequently to the beginnings of a Kurdish state. They always talk about being
the only large nation that does not have a state. How that is going to come
about—if it comes about, who knows?

Then you have another, I think, very
important consequence of the war, which many people are trying to avoid facing.
That is Iran has been empowered, or its power has increased. And I don't think
you can really reduce that fact, unless you are prepared to deny that the Shias
in Iraq are going to somehow or another turn against or become a bulwark against
Iran, which is really patent nonsense. There is no secular, liberal middle class
of any consequence in Iraq. If there was one, it was destroyed by hyperinflation
in the 1990s, by immigration and exile, and by the terrible sufferings of the
Iraqi population under sanctions in the 1990s.

So the entire project of
building, as it were, a democratic secular order in Iraq, which may have
underpinned the American plan, as it were, was based on a false premise. A large
number of Iraqi liberal politicians who were in exile also believed that the
society of country clubs that they were used to in the more affluent parts of
Baghdad, with intellectual discourse, with well-educated people who held
important positions, that this was Iraq.

Iraq had really changed beyond
recognition, as far as I was concerned, in many ways. I left a country with a
population of ten million people; I came back to a country of 25 million people,
maybe 30 million. The entire balance between urban and rural societies had
changed. The cities exploded in size. Baghdad had a population of a million
people sometime in 1965-1968; now it has a population of maybe 6 million, of
which half live in one giant, entirely Shia, grim neighborhood called Sadr City, which was a relatively minor neighborhood in the
1960s.

We are moving, I think, into a situation where we have to
recognize that the consequences of this war are immense and that the current
policy of denying that these consequences are real and that they do not really
affect the neighboring countries in a significant, if not existential, way has
to be abandoned.

The military solution, even if it succeeds, even if the
surge succeeds, is likely only to be contained within the boundaries of Baghdad
and will keep the main issues still festering.

There is now a determined
effort on the part of the Shia Islamist parties to control the main props of
power inside the Iraqi government. Now, I am saying that as a fact, without
being for or against it. The surge in many ways strengthens that trend. It
strengthens the trend towards a sectarian division or crystallizing a sectarian
end to the Iraq crisis.

Normally you might say, "Well, so what? I mean
this country does not seem to be cohesive, is not united by language, is not
united by race, it doesn't seem to be united by culture, it is not united by
ethnicity, it is not even united by a community of interest. So why should this
nation exist in its present form?"

Well, there are two answers to that.
One is that sometimes Nature abhors a vacuum and you have to have a state there.
I think it is incredibly naïve to believe that Iraq will break into three
states, for the simple reason that it will not be acknowledged
internationally.

I think also it is naïve to expect that an Iraqi
identity and consciousness can be just wished or willed into the equation,
because sectarian divisions have gone very, very far, and the Kurds, whether we
like it or not, are not only alienated from the state, they are also busy
preparing their own state or statelet.

I think there has to be a major
rethink in not only American policy but also thinking in terms of what needs to
be done by Iraqi politicians and statesmen and leaders, because if we do not
refashion the politics of Iraq in the context of the changes in the patterns of
power inside the country and their effect on their neighbors, then I don't think
we will get a stable end-state.

That I believe can only be done by the
only party, frankly, that has the resources and means to do that. This project
would have sunk any other country except the United States—not because of the
brilliance of its political or policy leadership, but just because it has a huge
amount of resources that nobody else has. I mean, after all is said and done,
the United States will probably have spent nearly a trillion dollars in this
exercise. Even if they take all of Iraq's oil for the next 50 years free of
charge, it would not pay what the taxpayers have paid. So I think the United
States has to be involved in this U-turn, as it were.

The [U-Turn's]
end-state is some kind of treaty that confirms within acceptable boundaries the
changes in the patterns of power inside Iraq; recognizes, acknowledges, and
accommodates within certain minimal standards of acceptability by various powers
concerned, the changes that the Iraq war has had on them; some kind of
congress—if this was the 19th century, we would have the Congress of
Berlin or the Congress of Vienna or something like that. We need something
like that. We have to think outside of the box, because if we don't, I think we
will end up at best a sectarian state with a large chunk of the country
in a state of, if not insurrection, deep rejection and parts of the country in
an autonomous or confederal arrangement.

This may be a reasonable
end-state for most Iraqis, but the neighborhood won't accept it. If we want to
have some reasonable prospect for our people, then we have to acknowledge that
you can't live alone in a rough neighborhood; you have to deal with your
neighbors and try to take into account what their concerns are, as long as they
recognize and accept and acknowledge what has happened inside the country,
within limits.

Thank you.

JOANNE MYERS: I want to thank you
very much. I think the size of the audience today confirms our concerns for what
is happening in your country.

I would like to open the discussion up
now.

Questions and Answers

QUESTION: Thank you, Mr. Minister, for an
excellent set of remarks.

I would like to press you a little bit on the
final part of your remarks, on where we are now and where we go. When I talk to
people in the Pentagon in particular about the military aspects, they would
agree with you that this cannot be solved militarily. When they talk about the
ongoing efforts, their concept at least is that at the moment we are trying to
offer the Iraqi government, such as it is, the opportunity to make very serious
political choices and, frankly, build some institutions that can hopefully over
time attract greater support by the population.

Can you talk about that
a little bit? Do you see any effort at all ongoing right now for the government
to address those serious problems of sharing of oil, reconciliation,
de-Baathification, dealing with the militia groups; or are we really just sort
of buying time for no real reason right now until we go to the next step, the
next chapter, in Iraq? Thank you.

ALI ALLAWI: I would like to just
make a short disclaimer. Although in the biography you have it says that I am a
senior advisor to the prime minister, I am actually a sort of dormant advisor.
What I am saying now and what I have said in the past is something that is
entirely my own views and has nothing to do with the Iraqi government. So I will
answer in that context.

The present Iraqi government is the result of a
coalition-building exercise, but it is not true to call it a national unity
government, in the sense that it has a common purpose and a common plan and a
common set of objectives. It is basically a government dominated by the United
Iraqi Alliance, or certain groups or factions within that, and that takes
its ultimate sanction from the religious authorities in Najaf.

There is a
plan to continue to, as I said, keep the commanding heights of the government
and the state under the control of the majority party, which works against the
idea of, quote/unquote, national reconciliation. Whenever the two issues have
been put in conflict, the choice always goes back to accepting that they should
push the limits of power of the majority group. It is not that they are
negotiating in bad faith, but I think there is a different set of objectives
involved here.

A case in point, for example: de-Baathification, which was
seen by many people as de-Sunnification, was blamed for a great deal of the
subsequent alienation of the Sunnis from the new order. The attempt to reform
that and to restructure it in a less Draconian way—although I don't believe it
is as Draconian as people claim—was just torpedoed recently by Ayatollah Sistani, which really proves the point I was trying
to make, that there are different visions here as to what the end-state is
likely to be. Unless we recognize that some of these visions are in conflict
with each other and try to reconcile them, we will just end up basically
spinning our wheels.

The oil law will fall or succeed inasmuch as it
meets the desires of the Kurdistan regional government for control over new
oilfields in its territory and for unfettered access to revenues. Now, you can
say you can work around that a bit, but you can't really go away from that
objective. That objective is not really a national objective; it is a regional
objective. Other regions may share it, but that is another matter from saying
that it is a national goal.

It is very hard to articulate, I think, a
unified national vision if you have conflicting agendas within a certain
government.

If I could just get you to go back to one of your
earlier remarks, when you talked about the reactions in the broader region, or
rather the immediate region, I wonder if you could parse that out a little more
for us, the concerns of neighboring states. You alluded to Bahrain being a
country with a Shia majority. Assuming that you see this as either a
continuation of the present kind of governance in Iraq or chaos, one can
understand the worries of the neighborhood.

But can you help us
understand what the serious extents of the threats are? Are you worried, for
example, that there could be a demonstration effect for other Shia populations?
Or is it simply that, say, a country like Jordan is concerned by the mere fact
that there is a majority Shia regime in a neighboring country? Because we have
always been told that Iran is Iran and Iraq is Iraq and the fact that they are
both Shia doesn't necessarily mean that Tehran is pulling strings in Baghdad. So
are these concerns exaggerated? What are they based on? If you could just expand
on that a little bit, since you alluded to it at the beginning.

ALI
ALLAWI: I was introduced as a Shia politician. I am actually a sort
of politician who is a Shia, so it is a little bit of a different
matter.

Really the question goes to the heart of the issue, which is how
do Arab Shias view themselves and how are they viewed by their co-religionists?
I am afraid that so far the different perceptions lead to different
outcomes.

It is true that nearly all the Shias of Iraq are Arabs—and they
are not just Arabized, they are Arab tribes—so the Arab component of it is
extremely powerful. But you can't divorce that from the historical fact and the
legacy that the props of identity ultimately relate to the class as it were, or
the group, that has preserved and protected that identity, which is seen to be
the senior religious authorities. So the senior religious authorities—it is
impossible to think of Shiism, I think, in its present form, without
relationship to the existence of a religious authority. If you take the
religious authority out of that, Shiism would probably collapse. So there is
that loyalty, that other loyalty.

These multiple loyalties or multiple
layers of identity are something that is intrinsic to the Shia character. You
move from one to the other, but that does not necessarily mean that you choose
one over the other. You flip from one to the other, depending on the
circumstances and conditions.

In many ways, for example, the Shias are
extremely Arab in their thinking. Let's take the issue of the Arab-Israeli
conflict. It is, I think, next to impossible—and one of the silly analyses of
the then-neocons—to believe that the Shias of Iraq are going to move en masse
into another category. That is not true. They think like and empathize with the
Arab causes, no matter what they may be.

But when it comes to Iraq and
when it comes to the response of others to their empowerment, they think
differently. So it is not that the Shias of Iraq are disloyal. You cannot really
be disloyal to a country in which you are a majority. It doesn't make sense.
Even if they choose to be disloyal, they have a right to be disloyal.

So
all of these comments that are thrown out by, for example, President Mubarak,
that the Shias owe their loyalty to Iran, are really ridiculous. They don't owe
their loyalty to anyone as such exclusively. They owe loyalty to the state if
the state treats them as first-class citizens. They owe loyalty to the religion
of Islam if that is threatened or if that finds itself in confrontation with
other cultures and civilizations—I hope not. They see themselves as Shias,
specifically Shias, if they are challenged as Shias. So it is a complex
identity.

That has not yet been resolved also by the Sunnis. The Sunni
Arab—I don't call it mindset, but the historical legacy of Sunniism—is basically
to deny the existence of the minority strand and deny its legitimacy. They will
accept it, they will acknowledge it, as at best a form of deviation, but at
worst it is an anathema. This constant sense of being somehow at odds with the
majoritarian perspective causes another twist in the relationship.

The
last one has to do with Iran. Now, it is probably the misfortune of the Shia
Arabs that Iran is a Shia state. I think we would probably be much happier if
Iran had stayed Sunni, because basically the divisions then would not be couched
in power terms and would not be couched in Iranian versus Arab or Persian versus
Arab terms.

But you need to have a long period, I think, whereby the
threats are seen to be to some extent imaginary before you reach a new degree of
acceptance. I think, for example, of the Gulf countries, where economic progress
has certainly changed a great deal of the attitude of the Shias there. They are
far more moderate, they are far more accommodating to changes, they are far less
confrontational. And frankly, I think, if they had to choose between states that
are responsive to their needs as citizens and treat them with respect, they
would obviously choose loyalty to their state rather than some mythical Shia
international. But this doesn't really apply to the conditions in Iraq, because
in Iraq they have different formulae.QUESTION: Thank you very
much, first, for your remarks.

I wonder if you could say more about what
you think the United States' policy toward Iraq ought to be. You made this very
general point about the trillion dollars and the United States has to stay
involved. As you obviously know, everybody here knows, there is this huge debate
between the Democrats in the Congress and the president about the duration of
American military remaining in Iraq, so part of your answer maybe could be about
that.

But I wonder if beyond that you could say something—if you were
speaking to one of these candidates who is going to become president in two
years from now, what's the general thrust of what you mean by the United States
staying involved in Iraq, in the future of Iraq?

ALI ALLAWI: Maybe
I am being a bit idealistic or naïve—I don't know—but I don't think that the
Iraq crisis and the issues relating to that aren't to be separate from the
Arab-Israeli thing, that this can be handled on the basis of partisan politics
here. I am looking at it from an Iraqi and an Arab and a Middle Eastern point of
view.

To us, it is far better to have a bipartisan policy based upon some
kind of desirable end-state that not only you agree on but also the other
parties agree on. That end-state, I think, is what I was referring
to.

Now, how do you get to that end-state and what are the components of
that end-state, and whether this can be handled unilaterally by the United
States' own relationships with specific countries and its own immense power
inside Iraq, or whether you are going to walk away, leaving a few troops and
bases in Kurdistan and declare victory, or whatever is the expression?

My
own thinking is that there are now the possible ingredients for really a sort of
Wilsonian leap, if you want to call it that, of separating the
Iraq crisis from the Arab-Israeli issue. In many ways, it is a separate crisis.
This leap would call for a kind of—the end-state in my mind would be a treaty
arrangement which would guarantee the final political settlement in Iraq between
the various groups and set limits to their ambitions, without denying the
changes that have taken place, and in the process draw in all the regional
countries as co-guarantors or as co-principals in this exercise.

You
would then have a number of treaty-related commissions or agencies that would
manage or would help to manage the process of enforcing this new balance of
power, as it were, arrangement— inside the Middle East as a result of this war.
I think then the withdrawal of American troops makes ample sense because it
would leave behind—this sounds like a grand word—a kind of architecture of
security both inside Iraq and in the region.

But people have to come to
the table with their specific interests. We, as Iraqis, also need to know what
the United States wants out of this country in the end. Do you want Iraq to be
like a part of the military base archipelagos you have around the world? Do you
want Iraq to be a liberal democracy? Do you want Iraq to be a platform to
confront Iran? Do you want Iraq to be used as a goad to the other Arab
countries? All of these factors have to also feature in.

QUESTION: Thank you for an enlightening discourse.

You started by talking about how the regimes in the region were afraid of the
consequences of what is taking place in Iraq and you said it is an existential
threat.

When you answered the earlier question—and I agree with you entirely and I
don't agree with Hosni Mubarak, or for that matter the king of Jordan, that for
the Shia of Iraq their loyalty is to Iran. I don't think so. I think they are
Arabs.

But in your answer you said that the Gulf Shia, because of the
economic status, are much more loyal to their state. Where is the threat?
I know in the beginning after the invasion probably the existential threat to
the regimes was not from the experiment in Iraq but from the possibility of
invasions if the Americans succeeded in Iraq.

I just want to know where
is exactly the threat? Is it the threat from the Americans or the threat from
the experiments, because I think now they all concluded that there is no threat
from the experiment in Iraq.

Thank you.ALI ALLAWI: I think
it is a very good point. But when I say "the Shias of the Gulf" I really mean
Saudi Arabia. I don't mean Kuwait or even Bahrain, because in the final say
Saudi Arabia is the biggest power in the area. As long as the Shia ascendancy in
Iraq, if it takes that form, if it takes a consciously Shia form, if it changes
the orientation of the Iraqi state, that I think would be seen as a serious
threat.

Now, given the current mindset of people, if that mindset changes
with time, and if they are prepared to accommodate it without necessarily
undermining their own ideological foundations of this Wahhabi Islam as it were,
and if they don't see that their 15 or 20 percent of their population which is
in the eastern province as somehow infected by this, and therefore may make
demands that are unacceptable, then yes, they should be able to
accommodate them. But, unfortunately, that flexibility in thinking has not yet
been seen.

I can tell you that Saudi Arabia has basically
cold-shouldered the Iraqi government since April 9th. Of course, they had
cold-shouldered Saddam. But they refused really to engage with this government
at any serious level. Things are beginning to change now slightly, but it is a
very reluctant engagement, and I think they much prefer to quarantine it and to
have the minimum amount of relationships with it rather than engage with it.
That is where I think the existential threat comes.

In Turkey is a
different matter, and in Syria also it is a different
matter.

QUESTION: Given your own background in finance and
engineering, would you please comment on the role of oil in this whole story,
the importance, for example, of the location of the oil deposits in the various
regions, and the possibilities for Iraq to enhance its future end-state with the
oil revenues?

But, in addition—and you have been at the World Bank—is
the question of local entrepreneurship. You mentioned the demise of the middle
class. But can you foresee a rebirth of the middle class and an opportunity for
more people to enhance their own well-being so that they will be more loyal to
the end-state?

ALI ALLAWI: Regarding oil, obviously oil is in many
ways the only economic activity of consequence in Iraq. I mean it accounts for
90 percent of government revenues and the government accounts for 75 percent of
the GNP. So you can see that without oil, Iraq would be way down in terms of the
income scale, probably one of the poorest countries in the world now. So in
terms of domestic revenue generation and domestic resources, there really is
nothing else right now except oil, apart from aid transfers which are now
dwindling.

Iraq has huge amounts of oil deposits. Just by the known
fields that we have, we can increase production over the next five years to
somewhere around $3-$3.5-$4 million a day, and even up to $6 million. So it is
sitting on a very, very large pool of oil.

But oil is, again, part of the
problem, I think. The so-called oil dividend has against it the sort of Dutch
disease, where you drive every other economic activity and you have an
overvalued exchange rate, which makes it difficult to diversify the
economy.

But it is a resource that everybody is fighting for. Everybody
wants to gain control if it. But I don't think that oil was the driver of
American policy in Iraq. It may be a contributing factor, but it was not the
driver, because you really can control—by "control" I mean able to influence—the
direction of oil exports and prices in ways that fit your national energy
strategy. That's what I mean by control. That doesn't require that you
physically and militarily occupy oilfields. This is done in a thousand and one
ways—through diplomacy, through pressure, through markets. So I don't subscribe
to the argument that oil is what drove all of this.

But now that the dust
has settled a bit on the oil sector, there is a struggle for supremacy between
various countries as to which companies and which groups are going to gain the
main concessions. Oil is obviously a critical issue in terms of the regional
revenue generation.

Now, I think Iraqis are very entrepreneurial people.
There is no doubt about that. And I don't say that so casually, but it is true.
Iraq before these various socialist experiments that we had was very much an
open economy, one of the most open economies before, and it was an entrepot
economy. Basra was a very important port, much more so than any of the Gulf
ports now. It can act as a major transshipment center to goods coming from the
Far East to southeast Europe and Russia. It can be what it has always been, a
kind of trade and a passageway.

But the drive has been hampered by very,
very bad economic policies, starting from the 1960s, and the era of sanctions
really destroyed what was left of the non-oil Iraqi economy.

The
agricultural sector is doing reasonably well, now that prices have been
adjusted. I think with the right economic climate, the right set of policies, we
would have a very, very quick rebirth of the entrepreneurial class, which within
a short period of time would be able to compete at first with regional groups
and then internationally. So I am extremely optimistic about the prospects for
the Iraqi economy once stability is established.

QUESTION: The
world and the United States seem to agree that the war in Iraq has been a
disaster. The Carnegie Council is a voice of ethics. So, ethically should the
United States have left Saddam alone and done nothing, or is it possible there
was a way to have handled this without war?

ALI ALLAWI: Actually,
I tried to answer that in the book. I think the rules of a just war could have
been applied in Iraq. If you want to speak of ethics, you can talk about Thomas
Aquinas, and there is the Islamic equivalent. It is, I think, incumbent upon
the international community to interfere in the affairs of so-called sovereign
states if there is a certain threshold of domestic violence and oppression and
also regional violence.

But these were not the arguments used. The
arguments were not used that we are overthrowing a dictatorship that is
tyrannical, because I think it would not have been accepted by the international
community. The arguments used were weapons of mass destruction and, as an
add-on, the war on terror. It was only ex post facto that democracy and tyranny
and so on were brought into it.

Mmy own belief is that if the United
States had gone in specifically with an ethical agenda—that is, it catalogued
the crimes of the regime and catalogued the dangers to the population of Iraq of
this happening—I think it would have had a different outcome. But that wasn't
the case. The case was entirely different.

It is also to do not only with
the failure of the United States to articulate this, but also the failure of the
Arab system, and broader, the Islamic system, or whatever systems we have, that
govern how you deal with countries that go beyond a certain acceptable
threshold.

Now, it is not something that you can calibrate—"when does an
authoritarian regime become dictatorial and when does dictatorship become
totalitarian?" But I think it's like trying to describe an elephant—you know it
when you see it. I think in the case of the Saddam regime it was like that.

There are others who disagree. But I think the rules of a just war could
have been applied in Iraq but weren't.

JOANNE MYERS: Mr. Allawi, I
thank you so much for being here and sharing your thoughts with us . Thank you
all for coming.

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